FX Daily analysis
Dollar drifts lower as peso and franc outperform, real lags behind
The dollar index slipped for a third straight session, a quiet move that masked sharp divergence underneath. USD/MXN fell 1.48%, its largest move for its own volatility in the pack, while USD/BRL rose 0.96% to sit at a one-month high.
Takeaways
- USD/MXN fell 1.48% on the day, a 2.63 standard deviation move, the largest in the pack relative to its own volatility.
- The dollar index eased 0.08% on the day and sits 0.13% lower on the month, with the US 2-year yield down 5bp.
- USD/CHF fell 0.59% and now trades at its one-month low, a 1.33 standard deviation move.
- USD/BRL is the outlier among the main movers, rising 0.96% on the day and 9.60% over the week to a one-month high.
The dollar
The dollar index closed at 101.799, down 0.08% on the day, down 0.16% over the week and down 0.13% over the month. The move is small in its own terms: a z-score of -0.28 puts it well inside normal daily range. The index sits 0.19% above its one-month low of 101.61 and 0.74% below its one-month high of 102.55, with both the 50-day average (101.54) and 200-day average (100.15) now below spot.
The US front end eased alongside it. The 2-year yield fell 5bp on the day, 13bp on the week and 32bp on the month, closing at 4.56%. The 10-year fell 4bp on the day to 4.94%. The dollar index carries a 0.37 correlation with the 2-year over the past 60 sessions, a loose but positive relationship, consistent with a dollar that gave ground as front-end yields fell, though the daily magnitudes here are modest enough that the read should not be pushed hard.
G10 majors
EUR/USD rose 0.06% to 1.11894, a small bounce that leaves it down 0.25% on the week and 0.54% on the month. The pair sits 0.53% above its 52-week low of 1.11297, printed within the past month, and 0.40% below its one-month high. The euro's correlation with the 2-year is near zero at 0.03, so the day's move did not track the front end in any consistent way.
USD/CHF was the standout among the majors, falling 0.59% on the day to 0.81877, a move of 1.33 standard deviations, and now sits exactly at its one-month low. The pair is down 0.61% on the week and 1.42% on the month, and has moved through its 50-day average (0.82673) to trade 1.53% below its 200-day average (0.80623) is still below spot, meaning the pair remains above its longer-term mean even after the drop. USD/JPY ticked up 0.09% to 157.94, little changed on the month (+0.01%) but up 0.71% on the week, trading 0.28% below its 50-day average.
GBP/USD rose 0.20% to 1.34057, sitting exactly at its one-month high and essentially on its 200-day average (0.06% below it). The pair is up 1.56% on the month, the second-largest monthly gain against the dollar among the currencies in the pack. AUD/USD and NZD/USD moved the other way, down 0.39% and 0.23% on the day respectively, with NZD/USD the weaker of the two over the week at -1.45%.
Emerging markets
In Asia, USD/CNY fell 0.20% to 6.6475, a fresh one-month and 52-week low for the pair, extending a 0.46% weekly decline and an 0.85% monthly one. USD/KRW moved the other way, up 0.50% on the day and 1.74% on the week, though it remains down 1.17% on the month and sits just above its one-month high. USD/INR fell 0.28% on the day to 94.89, trading 0.61% below its one-month low.
In Latin America and EMEA, USD/MXN led all pairs in the pack with a 1.48% decline to 18.57376, a 2.63 standard deviation move, pulling the pair off its one-month high. USD/BRL moved sharply the other direction, up 0.96% on the day and 9.60% over the week, now at a one-month high of 5.4366 and 2.82% below its 52-week high. USD/ZAR and USD/TRY were both little changed on the day, up 0.04% and 0.07% respectively, with TRY sitting at both its one-month and 52-week high.
Rate differentials and central banks
The rate differential backdrop is wide across the main movers and none of it is new. Mexico's policy rate stands at 6.50% as of October 27, 2.50 percentage points above the Fed's upper bound of 4.00%, a gap unchanged in direction since Banxico's last cut on May 8. Brazil's rate sits far higher still, at 13.75% as of October 27, 975bp above the Fed, following a 25bp cut on September 17. Neither currency's daily move lines up cleanly with the 2-year: USD/MXN carries a -0.14 correlation with the UST 2-year over 60 sessions and USD/BRL a weak +0.10, so the session's divergence between the peso and the real is not explained by the US front end moving in one direction.
Switzerland's policy rate is 0.00% as of October 27, with no last-decision date recorded in the pack, placing it 400bp below the Fed's upper bound. The franc's 0.59% advance is the sharpest move among the G10 pairs for its own volatility, yet its correlation with the UST 2-year is -0.05, near zero, so the day's drop in US yields does not read as the direct driver here either.
China's PBoC rate stands at 3.00% as of October 19, with no last-decision date in the pack, a 100bp gap to the Fed. USD/CNY's 0.15 correlation with the 2-year is the highest among the four main movers, modestly consistent with the pair easing as US yields fell, but the relationship remains loose. Across the dollar bloc, the broader pattern is a front end that eased on the day and the week, a dollar index that eased with it, and individual pairs that diverged from that backdrop more than they followed it.
Levels that matter
- USD/MXN: closed 18.57376, below the one-month high of 18.8521 (-1.68%) from below, above no immediate support level listed.
- USD/CHF: closed 0.81877, at its one-month low, with the 50-day average at 0.82673 (0.97% above) and the 200-day average at 0.80623 (-1.53% below).
- USD/CNY: closed 6.6475, at both its one-month and 52-week low, with the one-month high at 6.6926 (0.68% above).
- USD/BRL: closed 5.4366, at its one-month high, with the 52-week high at 5.59 (2.82% above) and the 50-day average at 5.13949 (-5.47% below).
- EUR/USD: closed 1.11894, between its one-month high of 1.12347 (0.40% above) and its 52-week low of 1.11297 (-0.53% below).
- USD/JPY: closed 157.94, between its one-month high of 158.52299 (0.37% above) and its 50-day average of 157.5008 (-0.28% below).
- GBP/USD: closed 1.34057, at its one-month high, just below the 200-day average of 1.34134 (0.06% above).
- USD/KRW: closed 1344.72998, at its one-month high, below the 50-day average of 1347.61059 (0.21% above).
Every pair
| Pair | Last | Day | Week | Month | Year to date | Policy rate |
|---|---|---|---|---|---|---|
| The dollar | ||||||
| Dollar indexindex | 101.80 | −0.08% | −0.16% | −0.13% | +3.43% | n/a |
| G10 majors | ||||||
| EUR/USDUSD per EUR | 1.1189 | +0.06% | −0.25% | −0.54% | −4.78% | 2.50%ECB, −150bp vs Fed |
| USD/JPYJPY per USD | 157.94 | +0.09% | +0.71% | +0.01% | +0.77% | 1.25%BoJ, −275bp vs Fed |
| GBP/USDUSD per GBP | 1.3406 | +0.20% | +0.21% | +1.56% | −0.50% | 3.75%BoE, −25bp vs Fed |
| USD/CHFCHF per USD | 0.8188 | −0.59% | −0.61% | −1.42% | +3.38% | 0.00%SNB, −400bp vs Fed |
| USD/CADCAD per USD | 1.3987 | 0.00% | −0.18% | −1.64% | +1.97% | 2.25%BoC, −175bp vs Fed |
| AUD/USDUSD per AUD | 0.7000 | −0.39% | −0.42% | +1.03% | +4.82% | 4.60%RBA, +60bp vs Fed |
| NZD/USDUSD per NZD | 0.5619 | −0.23% | −1.45% | +0.31% | −2.41% | 2.75%RBNZ, −125bp vs Fed |
| Emerging markets | ||||||
| USD/CNYCNY per USD | 6.6475 | −0.20% | −0.46% | −0.85% | −4.98% | 3.00%PBoC, −100bp vs Fed |
| USD/MXNMXN per USD | 18.5738 | −1.48% | −0.78% | +1.42% | +3.28% | 6.50%Banxico, +250bp vs Fed |
| USD/BRLBRL per USD | 5.4366 | +0.96% | +9.60% | +4.10% | −1.46% | 13.75%BCB, +975bp vs Fed |
| USD/INRINR per USD | 94.890 | −0.28% | −0.05% | −1.39% | +5.48% | 5.50%RBI, +150bp vs Fed |
| USD/KRWKRW per USD | 1,344.73 | +0.50% | +1.74% | −1.17% | −6.85% | 3.00%BoK, −100bp vs Fed |
| USD/ZARZAR per USD | 16.6125 | +0.04% | −0.08% | −0.52% | +0.37% | 7.25%SARB, +325bp vs Fed |
| USD/TRYTRY per USD | 49.9753 | +0.07% | +0.47% | +1.74% | +16.24% | 36.00%CBRT, +3,200bp vs Fed |
Moves as each pair is quoted: a rise in USD/JPY is a stronger dollar, a rise in EUR/USD a stronger euro. Policy rates as the analysis had them on file, against the top of the Fed's range.
Sources
Exchange rates and the dollar index at the session close from Yahoo Finance; the Fed and ECB rates and Treasury yields from FRED. Every figure in this analysis was checked against the session's verified fact pack. The text was drafted with a language model from that fact pack; the methodology explains how.
For information only. Not investment advice.